An increasing number of states across the country are either allowing or requiring electronic filing for corporate entities.
Among them are California, Indiana, Pennsylvania and Virginia, which have enacted laws within the past few months that require the e-filing of corporate and passthrough entity returns by professional return preparers. Massachusetts has refined its online system to make e-filing easier and more streamlined.
Most states allow but don't necessarily require C corporations to file their returns electronically. While 36 states provide e-filing options for C corporations, 20 of those states have e-filing requirements of some kind. Eleven states don't allow C corporations to e-file.
The number of states allowing or requiring electronicfiling is slightly lower for passthrough entities. Thirty-three states provide e-filing options for passthrough entities, with 18 of those states imposing e-filing requirements of some kind. Fourteen states don't allow passthrough entities to e-file.
For example, On Thursday, Dec. 11, the Indiana Department of Revenue announced that it will allow electronic filing for S corporations. Previously, the only option for S corporations was to file a paper return.
The Department emphasized that its decision was driven by a desire for greater accuracy and security in its filing procedures. It noted in its Tax Talk Blog that the process would also likely be easier and faster for S corporations. These concerns as well as a desire for efficiency are likely part of the driving force behind this general movement of states toward electronic filing.
The Department added that it intends to expand their electronic filing program to other types of corporations in the future. For now, Indiana joins such states as Arkansas, Idaho and Missouri that allow electronic filing for pass through entities.
Continue the discussion on Bloomberg BNA's State Tax Group on LinkedIn: What is the likelihood of more states implementing e-filing for corporate entities and how will this affect the filing process?
For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library today.
By Alex Dowd
Follow Alex on Twitter at: @ADowdSALT
Follow us on Twitter at: @BBNATax
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